Inflation runs hot just before Fed decides policy

Consumer prices in May were slightly hotter than expected, which helped to send bond yields higher and stocks lower.The data showed there is still not a lot of wage pressure, but it looks like the market is trying to get ahead of that.

Is it a threat to stock multiples? Not yet.

Trader will be looking carefully at the Federal Reserve when it issues its policy statement on Wednesday. As usual, look for any subtle changes to the narrative—such as references to shifts in wage expectations, for example. Also, look for even more discussion about "complacency", that being a byword for excessive risk taking.

Elsewhere

NYT's Stewart: 'Flash Boys' was disappointing

James Stewart of The New York Times weighs in on Michael Lewis' "Flash Boys." He says there is no news in this book.

1) There's high frequency mania on Capital Hill, as not one, not two, but three congressional committees hold hearings on high frequency trading (HFT) in the coming days. Today, the U.S. Senate Permanent Subcommittee on Investigations is holding hearings tomorrow on HFT, specifically in the Homeland Security and Government Affairs Subcommittee.

On Wednesday, the Senate Banking Committee's Subcommittee on Securities, Insurance, and Investments, will chair another Senate hearing on HFT and its impact on the economy and U.S. securities markets. Elsewhere, Representative Scott Garrett (R-NJ), Chairman of the Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, is also holding a hearing. Rep. Garrett's Subcommittee has jurisdiction over the SEC; Steve Luparello, the SEC's Director of Trading and Markets, will testify.

SEC Chair's Mary Jo White's speech last week, in which she laid out a series of measures on improved rule making (more registration of HFT and more disclosure from dark pools), and implied there would be a review of some elements of Reg NMS, can now be seen as a clear effort to get out ahead of this issue.

My position on this has not changed: registration of HFTs and more disclosure from dark pools is certainly coming. However, outside of a couple "pilot programs" wholesale changes in Reg NMS are unlikely this year.

By the way, the wildcard at today's hearings may not be the chairman, Carl Levin, it might be the ranking minority member, John McCain.

I will be live on Power Lunch with IEX CEO Brad Katsuyama, who is testifying today, in the 1 PM Eastern hour.